The parade, which started at 9 a.m, saw members and supporters of the LGBT community ride along a five-km stretch of the Vietnamese capital while carrying multi-coloured flags, Efe news agency reported.
Viet Pride, Vietnam's version of Gay Pride, began in 2012 and has seen increasing support over the years, with celebrations held in 22 provinces in cities across the country as of 2015, according to organisers.
"In 2012, when you were asked why you should be proud, I think almost everyone in the LGBT community would find it hard to answer. But over the years, I started to realise the reasons why I should be proud of myself, and of my people," Pham Khanh Binh, the leader of Hanoi Queer and one of the organisers of the event, said.
In addition to the parade, film screenings, speed dating, discos and workshops have been held in recent days as part of the event.
LGBT rights are improving in Vietnam, with gay marriage tolerated by the state and a law passed last year allowing people who have undergone gender reassignment to register under their new gender.
However, discrimination against LGBT people remains an issue, with conservative views on sexuality still held in much of the country.
Organisers say Viet Pride is held to celebrate "the freedom to love and freedom of expression regardless of sexual orientation and gender identity".
